The Dollar index fell to levels last seen on January 16, bottoming at 97.18 in afternoon trade. Prospects for a Fed rate cut, as soon as the March policy announcement on March 18 have weighed on the USD for the past couple of weeks, with futures now pricing a 75% chance for a 75 bp cut this month. There's about 15% to 20% risk for 100 bps. Coronavirus fears are of course behind this move. Wall Street did manage a relief rally on Monday, though Treasury yields headed to fresh lows, indicating the safe-haven trade remains in effect. EUR-USD topped at 1.1184, up from pre-open lows of 1.1101. USD-JPY bounced to 108.11 from 107.40 lows. USD-CAD topped at 1.3394, later falling back to 1.3325 on stronger oil prices. GBP-USD meanwhile, dropped to 1.2742, then rallied to 1.2825.

[EUR, USD]EUR-USD printed near 2-month highs of 1.1184 in N.Y. trade on Monday. up from pre-open lows of 1.1101. Today marks the seventh consecutive session of higher daily highs, with the rally driven by diving Treasury yields and prospects for a Fed rate cut as soon as the next FOMC policy announcement on March 18. A potential counter force to a degree, will be the extent to which the coronavirus spreads in Europe. Should the outbreak worsen in Italy, and ramp up in Germany and France, further Euro gains from here may be limited.

[USD, JPY]USD-JPY has stayed above Asia's near five-month low of 107.30, though remained heavy early in the session in light of the evolving coronavirus backdrop. The pairing bottomed at 107.40 in early N.Y., coming from 108.57 highs during London morning hours. Since then, the sharp turn higher in U.S. equity futures saw the pairing head back over 108.10. The market has priced in 50 basis points of Fed easing at the March FOMC meeting, which will cap USD-JPY going forward.

[GBP, USD]Cable printed a low at 1.2742 in N.Y, down by just over a big figure from the intraday high, but remaining shy of the four-month low seen on Friday at 1.2726. The prime reason for the pound's recent underperformance is uncertainty stemming from the UK government's seemingly uncompromising stance about post-Brexit trade with the EU, negotiations for which have started today. The government signalled that it is prepared to leave without a deal at the end of the Brexit-transition phase on December 21st 2020. The BoE said today that the Bank was ready to act if the coronavirus situation worsened, also a Sterling negative.

[USD, CHF]EUR-CHF recovered to near one-month highs of 1.0707 on Monday, after falling to 4 1/2 year lows of 1.0584 on Friday, with the safe-haven franc pulling back some as a rare session of risk-on trade ensued. It is likely today's price action was just a pause in EUR-CHF declines, with much uncertainty remaining over the coronavirus outbreak. Switzerland reported its first case of the disease last week. The Swiss franc can be expected to rise further in the coming days, should the virus continue to spread.

[USD, CAD]USD-CAD fell from Asia opening highs of 1.3446 to London lows of 1.3315, as oil prices rose. Since then, the pairing has headed back to 1.3390 in North American trade. The severe risk-off backdrop seen last week is likely to continue, today's stock rally notwithstanding, which should keep the CAD under pressure. Weak oil prices, along with a relatively soft Canadian economy, partially driven by ongoing railway blockades, and prospects for global slowing due to coronavirus, should also support USD-CAD going forward. The pairing later eased to 1.3325, then steadied near 1.3350 into the close. Last Friday's nine-month high of 1.3466 marks resistance now.